Creative Industries and Economic Evolution
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Creative Industries and Economic Evolution

Jason Potts

The creative industries are key drivers of modern economies. While economic analysis has traditionally advanced a market-failure model of arts and culture, this book argues for an evolutionary market dynamics or innovation-based approach. The book explores theoretical and conceptual aspects of an evolutionary economic approach to the study of the creative economy. Topics include creative businesses and labour markets, social networks, innovation processes and systems, institutions, and the role of creative industries in market dynamics and economic growth.
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Chapter 4: Evolutionary Economics of Creativity

Jason Potts


Prolegomena This chapter is an edited version of an unpublished paper written in 2008 that sought to unpack the broader literature on the economics of creativity and to reconstruct it by distinguishing between operational and generic creativity, as a core analytic distinction in evolutionary economics. 4.1 INTRODUCTION Creativity is a primary resource of all nations because, like rationality, it is an endowment of all people. And while we may certainly argue about the exact distribution over people and nations, clearly it is the case that some people are more ‘creative’ than others (Boden 1990, Csikszentmihalyi 1996), yet in practise only some nations, regions or people are able to extract significant economic benefits from creativity. Why is this? As outlined in Chapters 1 and 2, there has been a recent turn in economics to focus on the creative industries. Interest in this sector is due to its apparent importance in the growth processes of post-industrial nations.1 However, the industrial supply-side focus on creativity in terms of firms, jobs, exports, industries, agglomeration and the role of the public sector has largely proceeded without micro foundations in an economic theory of creativity. Instead, it has proceeded in terms of standard microeconomic analysis of variously: (1) transaction costs (Caves 2000); (2) welfare economics (Baumol and Bowen 1966, Throsby 1994, 2001, Towse ed. 2003); (3) trade theory (Cowen 1998, 2002); (4) increasing returns (De Vany 2004); and (5) the economics of agglomeration and clusters (DCMS 2001, Florida 2002). These models have yielded significant analytic insight...

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